According to the New York Times, the “health” of the British economy is based on consumer spending as “manufacturing, once the cornerstone, struggles”. How can an economy be driven by consumption rather than production? If this were possible, why wouldn’t everyone do it? Why not just consume full-time and forget about production at all?
The article goes on to describe how a bit of a housing bubble has developed in the UK, fed by low interest rates. Does all of this sound familiar? [link]
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I particularly enjoyed this little gem.
“the average increase [in housing prices] is running at up to 18 percent a year, according to Halifax, the mortgage lender, far outstripping consumer price inflation of 1.1 percent.”
What balderdash! As if consumers don’t spend money on houses! It would seem that in the UK, they are spewing the same nonsense that they do here; housing prices aren’t related to inflation. Since housing is such a huge percentage of anyone’s cost of living, to not include housing prices from these cost of living indexes is fraudulent.
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